 companies, says Hesselink. Hungary is already Europe's second-largest producer of EV batteries. Audi has bolstered its Hungarian EV production line while Samsung's battery arm is setting up a new production facility there. Last year, Volvo announced a €1.2bn investment in a new EV factory in Košice, Slovakia. In February, it also announced plans to hire more than 500 people by the middle of the decade at a new EV software development centre in Krakow. So-called nearshoring may not necessarily mean quitting the countries where they already have factories, but it certainly influences new investment decisions, says Bruer. However, it is not just Western companies. Chinese firms selling goods to the European market also want to be closer. 'Chinese companies are investing heavily into expanding their EV supply chains in Europe,' says Hesselink, who adds that Chinese battery maker CATL is building a $7.6bn manufacturing factory in Hungary, and car manufacturers Nio and BYD are also exploring the CEE. Companies want to de-risk their supply chains, says Hesselink, not only from the increasing political risks of operating in China but also to exposure from shock events such as the Evergreen container ship's Suez Canal blockage in 2021 – which held up $400m of global trade an hour for six days. Cleaner supply chains CEE countries have big transportation advantages. Goods produced in Iłowa, which is close to the German border in Poland, for example, can reach 21 million customers within a five-hour drive. This matters both in terms of cost and logistics, but also for corporate sustainability goals. 'What is becoming increasingly important is the decarbonisation of supply chains,' says Hesselink. Manufac){kind=link}
Companies are eyeing manufacturing closer to home to bypass cost and security fears
China has long revelled in its role as the “world’s factory” but its dominance may be coming to an end.
Amid a rising tide of cost pressures, as well as president Xi Jinping taking a more hostile stance towards the West, chief executives are becoming increasingly keen to shorten their supply chains.
An American Chamber of Commerce survey in August found 40pc of US companies are already redirecting investment destined for China to other countries, or are planning to do so.
However, the US is not alone in moving away from China, as the president of one Japanese chip maker said that exporting from the country is just “no longer viable”.